(Reuters) – Japan’s Elpida Memory Inc said it filed for protection from creditors on Monday with 448 billion yen ($5.55 billion) in debt, the biggest bankruptcy filing by a Japanese manufacturer.
The filing suggested that a possible rescue by domestic lenders and would-be overseas equity partners had stalled, the Nikkei newspaper said.
Japan’s sole maker of dynamic random-access memory (DRAM) chips has been hobbled by weak prices after a surge in demand for Apple Inc’s iPad, which is much less reliant on DRAM chips than conventional PCs.
It was also saddled with heavy capital spending to keep pace with well-funded South Korean rivals Samsung Electronics Co and Hynix Semiconductor Inc, while a strong yen hurt its global competitiveness.
The filing raised concerns that the curtain could be lowered on Japan in the PC memory chip business that it once dominated.
However, speaking in a briefing, Japanese Trade Minister Yukio Edano said he hoped domestic DRAM production could be continued.
Elpida President Yukio Sakamoto will brief media on the bankruptcy filing at 6:45 p.m. (0945 GMT), a company executive said, speaking on condition of anonymity.
“The bankruptcy protection will not mean that Elpida will stop producing chips immediately, but Elpida is shrinking and major customers will defect from the company and move to South Korean companies, which means more market share for the latter,” said Lee Seung-woo, an analyst at Shinyoung Securities in Seoul.
“This is not a bad picture for South Korean chipmakers.”
Elpida’s debt was the largest ever for a Japanese manufacturer seeking bankruptcy protection, corporate credit research firm Shoko Research said.
The company, formed more than a decade ago by the merger of several large Japanese chipmakers’ struggling DRAM operations, is scrambling to meet deadlines in the next two months to repay 92 billion yen in bonds and loans.
Lenders to Elpida, which is a supplier to Apple as well as a victim of the iPad’s success, had given the company until this month to devise a turnaround plan, extending an earlier deadline, sources familiar with the situation told Reuters earlier this month.